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Mint, New Delhi Leslie D'Monte column

MUMBAI, Dec 17, 2012 (Mint - McClatchy-Tribune Information Services via COMTEX) --
India has always taken pride in manufacturing and promoting low-cost and low-priced goods and services. Given the low level of average incomes, it's hard to fault this line of thinking. In 2010, the World Bank said that 32.7% of Indians were below the international poverty line of $1.25 per day while 68.7% lived on less than $2 per day.

So it is a no-brainer that when India touts its "bottom of the pyramid" products, such as the famous Jaipur Foot or other low-cost innovations in healthcare and medicine, it is making a statement that affordable goods and services go a long way in helping the underprivileged sections of society. These innovations, and the so-called jugaad of Indians, also help citizens become adaptable to unfavourable conditions and circumvent unfair practices in society. But when pulled out of context, low-cost goods and services can become "cheap" -- more to mean "poor quality" rather than a "value for money" product or service. Further, such goods can prove a drag on the exchequer and become counterproductive, and make "cheapest" a dirty word.

Consider two such cases. First is that of the Tata Nano which was touted by the Tata group and the media at large as the world's cheapest car. Case studies were written about it, and some manufacturers even tried to emulate this model with their own versions. However, as Ratan Tata prepared to step down as chairman of the Tata group to give way to Cyrus Mistry, he began telling the media that he would like to have a second go at positioning the Nano more as an affordable family car rather than focus on it being a low-priced car.

Regardless of how one views the Nano, the fact remains that the car did offer Indians who ride two-wheelers a choice to upgrade to a four-wheeled vehicle. Without going into details such as the price of petrol or the mileage of the car, which is obviously better than that of bigger vehicles, Nano's sales never met Tata's expectations. That land problems in Singur added to his woes was altogether another matter. Tata, in interviews to the media, has acknowledged that the people perceive the Nano as a low-priced car and various stigmas have been attached to it. With a new marketing plan, he hopes to improve that image. For a non-discretionary product, this makes immense sense.

The other case had similar beginnings. However, the way the government is handling the task, the outcome may be very dissimilar and, perhaps, not very favourable. The case is that of Aakash, Union communications minister Kapil Sibal's much touted low-cost tablet which he hopes to price at $35 soon. At the outset, the effort and vision are laudable if with an exchange rate of Rs.55 to the US dollar, the tablet is priced less than Rs.2,000. Other low-cost tablets in India are typically priced around Rs.10,000. Much space has been devoted to the merits and demerits of Aakash since its inception and going into the details is beyond the scope of this article.

Suffice to say that Sibal can take a leaf from Tata's book and price Aakash as an affordable tablet which can give manufacturers enough room to pack in features needed by students, rather than cut corners in the world's "cheapest" tablet PC that no one wants to use.